US brewer Stone sells Berlin brewery and taproom to BrewDog

Germany | Wow. Unexpectedly, US craft brewer Stone has sold its Berlin brewery and taproom to Scottish craft brewer BrewDog. The transaction was announced on 5 April 2019.

BrewDog’s founder James Watt twittered: “We are delighted to announce that we have completed a deal to acquire an amazing brewery and taproom in Berlin from our good friends at Stone Brewing. We will officially take ownership of our new brewery on 1 May. The brewery we have acquired is in the Mariendorf neighbourhood of Berlin and was originally opened in 2016 in a beautiful and historic gasworks building which dates to 1901.”

BrewDog plans to close the place down for a short period of time to turn the building into a BrewDog space. Later this year, BrewDog will host a European AGM for its Equity Punks there, while making Berlin the next destination for BrewDog Airlines. The Scottish craft brewer has operated a BrewDog bar in central Berlin since 2017. It will open a bar in Hamburg this summer.

From what we hear, BrewDog will continue to brew Stone’s beers in Berlin, which is not a bad thing as it will give them some volume to start with. According to estimates, Stone produced about 30,000 hl beer in Berlin last year, most of which was destined for European markets and the United States.

When Greg Koch, Stone’s founder, decided on Berlin as his European brewing hub, he had grand plans. Apart from a 100 hl brewhouse, he also had a 10 hl pilot plant installed. What the brewery does not feature is a bottling line. There is only a canning line. The taproom and kitchen are both gigantic. The main room has 2,500 sqm with a 13 m high glass wall to the brewery and there are also 5,000 sqm of outdoor gardens.

Mr Koch said: “Ultimately the project turned out to be too big, too bold and too early in our growth curve in Europe. Sure, in hindsight, maybe we should have started smaller, aimed for the treeline instead of the stars. Today we lick a few wounds, but count our successes too. We are not leaving Germany. Or Europe. […] Our distribution to more than 30 European countries will continue to grow. The Stone Brewing Tap Room in Berlin’s borough of Prenzlauer Berg is still very much open.” 

Insiders say Mr Koch initially spent about EUR 30 million on his Berlin project and several millions each year to keep it afloat. What Mr Koch got wrong – seriously wrong – is the German beer market. He only sold his beer in cans, whereas domestic retailers prefer beers in two-way bottles. What is more, his beers were deemed far too craft-forward and too expensive. And as to his brewery taproom, which must have cost a fortune to design and furbish, it is too far away from where Berlin’s hipsters usually hang out and hence proved too large for requirements.

Instead, he should have opened several smallish taprooms in hip Berlin neighbourhoods and a brewery somewhere in the sticks. He should have produced more gateway craft beers and he should have looked at a far longer return on investment than he did.

But hindsight is always twenty-twenty. You have to give it to Mr Koch that he did not take the decision to sell his brewery lightly. People familiar with the situation say that discussions between Stone and BrewDog have only been underway for several weeks.

In the end, the Berlin adventure will leave Stone with a double digit bill, but Berlin’s independent craft brewers with a new home. BrewDog’s Mr Watt twittered: “We will be launching the ‘Berlin Craft Collective’ in the 10 hl pilot brewery at the Mariendorf site. We will essentially be giving the pilot system over to the craft brewers of Berlin to help them either start their brewing journey or scale up their business. As well as helping them brew on our system, we will also showcase their beers in all of our German bars.” 

BrewDog and Stone said they will continue to work together in the future, in the spirit of true craft beer collaboration and partnership.